The Harmonised Index of Consumer Prices is the euro area's official inflation gauge, compiled by Eurostat to a common methodology across EU member states. It is the metric against which the ECB defines price stability — a 2 percent symmetric target for headline HICP over the medium term.
How it works
Eurostat aggregates national consumer-price baskets into a single index using harmonised classification and weighting (COICOP), enabling cross-country comparability that purely national CPIs lack. Headline HICP covers the full basket; core HICP strips energy and unprocessed food. Unlike US CPI, owner-occupied housing is largely excluded, though an experimental OOH index is being phased in.
Why it matters now
HICP is the single number that anchors ECB rate decisions; in 2025-2026, with disinflation stalling and energy base effects swinging headline prints, the gap between headline and core HICP drives the market's read on when and how far the ECB cuts.
Example
In the cited briefing, headline HICP jumped to 2.6 percent year-on-year in March from 1.9 percent in February — a 0.7 percentage-point swing driven largely by energy, illustrating how volatile components can push headline above target even as underlying core momentum cools.
Frequently asked
- What is HICP?
- HICP is the Harmonised Index of Consumer Prices, the euro area's official inflation measure compiled by Eurostat to a common methodology across EU member states. It is the gauge against which the ECB defines price stability — a 2 percent symmetric target for headline HICP over the medium term, confirmed in the 2021 strategy review.
- How does HICP differ from US CPI?
- HICP differs from US CPI mainly in housing treatment and harmonisation. HICP largely excludes owner-occupied housing, whereas US CPI includes owners' equivalent rent worth roughly a quarter of the basket. HICP also uses harmonised COICOP classification and weighting across all EU states for cross-country comparability, which national CPIs lack. An experimental owner-occupied housing index is being phased into HICP.
- What is core HICP and why does it matter?
- Core HICP is the headline index stripped of energy and unprocessed food, isolating underlying inflation momentum less driven by volatile commodity swings. It matters because energy base effects can push headline above or below the 2 percent target while core reveals persistent price pressure. In 2025-2026 the headline-core gap drives the market's read on ECB cut timing.
- What is the ECB's HICP inflation target?
- The ECB targets 2 percent HICP inflation, symmetric, over the medium term, meaning deviations above and below are treated as equally undesirable. This symmetric formulation was adopted in the July 2021 strategy review, replacing the earlier 'below, but close to, 2 percent' aim that markets read as asymmetric and tolerant of undershoots.
- Who compiles HICP and how often is it released?
- Eurostat compiles HICP from national statistical institutes' price collections, harmonising them into euro-area and EU aggregates. A flash estimate for the euro area is released at the end of the reference month, with the final detailed reading published around mid-following month. National institutes publish their own HICP components feeding the aggregate.